I have two clients (husband and wife) who have separated and are looking to sort out their assets equitably.
They have two rental properties (owned jointly) which were bought for the same amount and at today's market value are virtually the same value.
They wish to take one property each and so this obviously involves selling a half share in each to the other party and a capital gain would arise for each of them with no funds to pay the tax. One party's gain would be covered by the annual exemption but the other party will have other capital gains in the year.
I am not sure if gift hold over relief applies in this case as I think it relates to land rather than property, am I correct or is there any other way the tax can be deferred?
Thank you for any replies.
Dave
Replies (19)
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TCGA 1992, s. 248A is what you are looking for. http://www.legislation.gov.uk/uksi/2010/157/article/8/made?view=plain
PPR
Forgive me if I'm wrong but isn't that just for land and not property? Just scanning that link it mentioned that a dwelling house is excluded land.
Only dwellings on which PPR relief is claimable are excluded, for obvious reasons.
Not just CGT to worry about
SDLT/LBTT (at the additional rate) is also a distinct possibility.
Gift holdover relief would not apply as there is no gift. Possibly replacement of business asset relief though, depending on the nature of the letting.
EDIT - I had forgotten about s248A. "land" usually includes both land and buildings - it is a generic term.
Forgetfulness
SDLT/LBTT (at the additional rate) is also a distinct possibility.
Gift holdover relief would not apply as there is no gift. Possibly replacement of business asset relief though, depending on the nature of the letting.
EDIT - I had forgotten about s248A. "land" usually includes both land and buildings - it is a generic term.
You also seem to have forgotten about FA 2003, Sch. 3, para. 3(d) and LBTT(S)A 203, Sch. 1, para. 4(d).
You're wrong. Why not read it properly, rather than just scanning it.
You also need to familiarise yourself with the meaning of land. http://www.legislation.gov.uk/ukpga/1992/12/section/288/enacted?view=plain
Er...
I apologise, had I read it properly I would have seen that.
Regarding SDLT, the properties are under the £125,000 threshold so that wouldn't apply anyway.
The first £125,000 might now be taxable at 3%, if the exemption does not apply.
3% stamp dutry if not main home
remember the new 3% stamp duty if someone already owns a property.
Er ...
In the interests of rudeness, make your mind up. My reference to SDLT/LBTT was made precisely with the point made in your last post in mind. I mentioned SDLT/LBTT as a possibility because there isn't enough information to determine whether the exemption would apply.
The issue in my pot, taking (slight) issue with first your pot was not that you mentioned the possibility, but the distinctness that you chose to attach to that possibility.
My second pot though was made to encourage the OP to recognise that they might be outside their field of competence.
Try Reading this:
Take a look at this, regarding year of separation:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...
Assumptions
Take a look at this, regarding year of separation:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...
The decision as to how to divide the assets seems to be being taken now (15 April). Unless they are a remarkably organised and emotionless couple it seems reasonable to assume that the actual separation took place more than 9 days ago.
@ RTFMorSTFW
That's a bit harsh! I was admiring your new name - a bit of light relief at the end of a stressful week. I prefer it to the last one(s)!
Cathy